Ebay

CASE: eBay's GLOBALIZATION STRATEGY

February 21, 2001

From: Amal

MBA Student, Spring 2006

To: Matt Bannick

Senior Vice President, International eBay

In response to your request for an outsider's perspective concerning how you can handle your growth in Latin America, the following report presents my analysis and recommendations of your potential growth in the area, and how to handle the Brazilian division of IBazar.

I hope that my report justifies my recommendations.

EXECUTIVE SUMMARY

After I received your email asking me to give recommendations about the IBazar Brazilian operation and your next expansion in Latin America, I spent the whole week analyzing the eBay current situation, as well as the Latin America e-commerce market, in order to come up with the appropriate solution that guarantees an immediate success of your company in the region. First, I will start with a systematic analysis of eBay's international market-entry strategies. Second, I will exanimate the Latin America e-commerce market. Finally, I will use the precedents analyses to provide you with a set of recommendations concerning the prospective expansion in Brazil, as well as, your extension in the entire Latin America as a whole.

eBay's INTERNATIONAL MARKET-ENTRY STRATEGIES

EBay aggressive desire to expand globally goes back to one of the very early goals of eBay: Create a global trading platform that would make it as easy as possible for anybody anywhere to trade practically anything. After eBay early success in the United States, it began looking at the possibilities of offering the service on an international level.

EBay has used all the three different options available to look at a new market. One of them is clearly to begin a site from scratch. That is essentially what it has done in France and Italy. Another option is to simply buy companies that already exist, and that is what it did with eBay Germany. The third option is to form a partnership. That's what it has done in Australia and in Japan.

But the prevailing strategy that eBay adopted broadly is to buy critical mass in global markets so it has a foothold to gather buyers and sellers. The ability to localize a global business is one of the biggest challenges, when you have a business model that works at home, the challenge is to find out what is critical for success and then look for ways to localize. That is why eBay increasingly buy a local player to enter a market.